Boon or ‘black hole’? Pa. private school scholarship program considered for expansion

Students at Lansdale Catholic High School in a 2017 file photo. (Emily Cohen/for NewsWorks)

A tax-break program that routes millions to Pennsylvania private schools could grow much larger if a new bill becomes law.

The proposal has powerful support in the state Senate, but Gov. Wolf’s spokesman calls it an “unfunded mandate.”

At issue is one of the state’s signature school choice programs, one that already provides nearly 50,000 students with scholarships to attend private schools.

Through the Educational Improvement Tax Credit (EITC) program and the Opportunity Scholarship Tax Credit (OSTC) program, Pennsylvania offers a maximum of $210 million in tax credits.

The recipients of these credits — which include businesses and individuals — donate to organizations that dole out scholarships or run educational “improvement” programs. The donors can then deduct between 75 and 90 percent of that amount from their state tax bills. So someone could donate $1,000 to a scholarship organization, then pay between $750 and $900 less in state taxes as a result.

The value of available tax credits has increased sevenfold since Pennsylvania started its first tax-credit program in 2001. But some say the demand for these credits — and the scholarships they provide — still exceeds supply.

“The problem is the program isn’t growing fast enough,” said Elizabeth Stelle, director of policy analysis for the Commonwealth Foundation, a think tank that supports the tax credit. “We need more than just incremental increases year after year.”

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